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Authentium Sells Anti-Virus Division To Commtouch

Commtouch : 29 July, 2010  (Company News)
Acquisition brings Command antivirus products including software for combating spyware and Trojans, into the Commtouch portfolio to enable the company to provide a full range of internet security products
Commtouch has signed a definitive Asset Purchase Agreement to acquire the assets, products, licenses, and operations of the Command antivirus division of Authentium.

Command antivirus - which also includes technology to protect against spyware, Trojan downloaders, and other threats - is strongly synergetic with the rest of Commtouch's product portfolio. With the addition of antivirus technology as a new, third product line, Commtouch will be offering a comprehensive set of solutions for inbound and outbound messaging and Web security to its customers, which are networking and security vendors and service providers.

The Command antivirus division currently provides its technology to a notable number of leading service providers and vendors, including Google, McAfee, and Microsoft. Certified by Checkmark, West Coast Labs, and a winner of multiple Virus Bulletin awards, Authentium's Command antivirus technology boasts a small footprint and a highly efficient event-processing system.

Commtouch is expected to pay $4.6 million in cash and an additional "earnout" contingent upon the achievement of certain revenue milestones through December 31, 2011, which may bring the total amount to approximately $8 million.

The acquisition is expected to be accretive starting the first quarter post-closing, and should contribute positively to Commtouch's non-GAAP top and bottom line in 2011. The acquisition will also allow Commtouch to accelerate its rate of growth in revenues and profits.

"In the past 18 months, we have expanded our product offerings from a single product line - that of messaging security - to three complementary product lines, including the one we are purchasing now. In addition, we have broadened our target markets from a single market - OEM vendors - to include service providers. We believe that this unique combination of expanded offerings and target markets will set the stage for healthy growth for the coming years," said Gideon Mantel, Commtouch's chairman of the board and chief executive officer.

Mr Mantel added, "Commtouch has considered a number of acquisition opportunities during the past year as part of our long-term growth strategy, and after a thorough examination, we decided that Authentium's Command division is the best fit for our business, both strategically and operationally. We believe that many of our current customers will be eager to consolidate their messaging and Web security needs around a single reliable vendor - Commtouch - and enjoy the operational simplicity and reduced total cost of ownership that this entails. We are excited about the opportunities ahead."

The transaction will be financed from Commtouch's own financial resources. Commtouch ended the second quarter of 2010 with approximately $16 million in cash and zero debt, and management therefore believes that following payment for the deal, the Company will maintain more than sufficient working capital to fund its existing operations as well as to pursue further opportunities and complete its share buy-back program.

"We are thrilled to join the Commtouch team. We see great synergies between Commtouch and Command, and both companies have a similar focus on both technological excellence and dedicated customer service," said Helmuth Freericks, Authentium's chief science officer. "With the acquisition, we will gain additional resources in terms of capital, marketing, and a renewed focus on enhancing the technology; all of which directly benefit our customers and further enable our commitment to world-class protection. We look forward to continuing to serve our customers moving forward as part of the Commtouch family."

Mr Freericks, who also co-founded Command, will join Commtouch's management team as General Manager, Antivirus Solutions. The rest of the Command employees, including its virus lab analysts, will also be joining Commtouch, under Mr Freericks' leadership.

Combining the skills and resources of both companies, Commtouch plans to make use of the Command technology and continue developing and enhancing it.

Closing of the acquisition is subject to customary conditions and governmental approvals, and is to take place by September 30, 2010.
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